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Elon Musk has reached a deal with the Securities and Exchange Commission, the two parties said in a legal filing on Friday. The new agreement provides much more detailed guidance about when tweets and other public statements by Musk must be approved by Tesla lawyers.

Musk's original deal with the SEC was announced last September. It required Musk to obtain pre-approval for tweets that "contain or could contain" information that's material—legal jargon for information that's significant to shareholders. While the SEC expected Musk to begin regularly clearing tweets with lawyers, Musk interpreted this language as giving him significant discretion to decide for himself which tweets contained material information. As a result, he didn't seek legal review for any tweets in the first few months the agreement was in effect.

In February, Musk tweeted that Tesla "will make around 500k in 2019." Hours later, he followed up with a clarifying tweet, stating that he "meant to say annualized production rate at end of 2019 probably around 500k." Musk didn't get this tweet cleared by Tesla lawyers. The SEC viewed that as a violation of the agreement and asked Judge Nathan to hold Musk in contempt.

But rather than immediately punishing Musk, Nathan earlier this month ordered the parties to go back to the negotiating table. Now, Musk and the SEC have submitted a revision of last September's settlement that is a lot more specific about which statements require review by Tesla's lawyers.

Under the new rules, Musk must get a Tesla securities lawyer's sign off on tweets (and other communications) regarding Tesla's finances, its production and delivery numbers, new lines of business, sales projections, proposed mergers, fundraising efforts, regulatory decisions, and several other types of information.

The SEC says that if the judge signs off on these new terms, the SEC will drop its request for Musk to be held in contempt. In other words, the SEC seems to be satisfied with getting Musk to start seeking legal review for his tweets the way the agency thought Musk had been doing since last time. The SEC is not seeking to punish Musk further for his February tweet.

But it's an open question whether Musk will be more cooperative now than he was in the wake of the original deal.

The new terms require Musk to seek approval for production and delivery numbers—or projections about future numbers—unless those numbers were "previously published via pre-approved written communications." Yet Musk had argued that when he predicted the production of 500k vehicles, he didn't need to get legal review because he was merely summarizing guidance previously published by the company (the SEC disagreed, arguing that the 500k number was inconsistent with Tesla's guidance). So it's not hard to imagine Musk continuing to tweet out production estimates without legal review, arguing that they're close enough to Tesla's official guidance that he doesn't need a lawyer's approval.

I've actually enjoyed this tit for tat between Musk and the SEC. Working out these limits with all that's involved is very important. Precedent setting. I've pondered how Edison might have fared in this environment as Edison was quite the self-promoter himself -- might say he had his own Reality Distortion Field.. along with the genius. So, maybe we've seen over the last year what that might have been like

How is it really precedent setting though? Do you really think Musk is the first person that the SEC has gone after for making fraudulent material statements?

Of course not.

But it's hard to take them seriously when they ignore far more blatant stock manipulation from short sellers.

The Shorts™ are a shadowy international cabal dedicated to bringing down Tesla and only Musk stands as valiant defender against these forces of darkness. No other company in history has faced such dreadful opposition but Musk and his faithful forum fanatics will stand their ground.

Incidentally. the Shorts™ are also playing at my local bar on Saturday.

I hate the precedent this sets. When did we all agree that tweets were official statements of policy? When did we vote to allow Twitter to become the center of political/economic/social policy making?

Twitter is wall-to-wall stream-of-consciousness hot takes, interspersed with in-group signalling rituals and out-group hate. There is no *there* there.

Anyone who uses any mouth-fart that appears on it as a guide to, say, the performance of an investment, needs to have their head examined.

A much better ruling would have been for the SEC to simply say "Twitter is not now and will never be a source for official information about anything".

It's not that they are official statements, it's that any statements made by a CEO of a company about that company, especially with specific/approximate numbers, can and does affect the market and thus the SEC has a legitimate interest in ensuring that his statements are in line with the legalities of what is allowed.

"Twitter is not now and will never be a source for official information about anything" is not enough, if he keeps spouting stuff about Tesla, investors will take it as still real information and buy/sell accordingly.

And since when are we supposed to protect said idiot investor from themself? If you want to use a dowsing rod or a crystal to divine the marketplace, is the SEC supposed to stop that?

The SEC is to regulate the market to keep it as fair to all as possible.

The 1929 Stock Market crash was because the large investors were pumping stock in worthless companies and then inventing stories to boost stock price and sales. When it got high enough, they would sell off their stock reaping huge profits while the ordinary Joes were crippled.

When FDR hired Joe Kennedy to lead the first SEC, it was because Kennedy had made his fortune doing just that. As Kennedy later said, he knew all the tricks that the stock frauds used to steal. Spreading false information was the top of his list.

Honestly, this is what the SEC should have gotten in the first settlement. Musk's tweets were possible because of the incredibly stupid terms they assigned to it. Why would anyone think those original terms were meaningful or enforceable?

Because they were. The judge cut Elon Musk an incredible amount of slack here. She could have - and in my mind should have - said "If you don't know what the term material information means, you have no business running a company".

The new agreement is the same as the previous agreement, except that it spells out material information in terms a five-year-old can understand.

Honestly, this is what the SEC should have gotten in the first settlement. Musk's tweets were possible because of the incredibly stupid terms they assigned to it. Why would anyone think those original terms were meaningful or enforceable?

And yet he agreed to them. If his lawyers really thought that they were unenforceable, they would have advised him to reject the original proposed settlement.

That isn't how it works. Although I am quite sure Musk thought he was in the clear, any intelligent lawyer would advise his client that there is never a sure thing in a court room. And I am sure the SEC lawyers thought the same way.

My thought is the original agreement was ambiguous enough that a judge would have tossed the complaint. But, even though some very smart lawyers go to court, in every trial, half of them lose. Almost every lawyer will advise a negotiated settlement over a trial.

What is the difference between a CEO making a comment in front of a live audience of 2,500,with many journalists, and tweeting the same message to millions?

You answered your own question.

It's the same difference as that room of 2,500 including journalists, and private comments at home after dinner.

We don't expect those private comments to be audited by the SEC, and we shouldn't expect tweets to be either.

I understand that lots of people *want* them to be, perhaps even Tesla themselves, but they simply shouldn't be. There is zero positive that will come out of this elevation of nonsense to "official" status, and a whole world of hurt that we've only just begun to understand.

Sure, no difference at all, just a private conversation between Elton Mollusk and his 26 million followers.

What is the difference between a CEO making a comment in front of a live audience of 2,500,with many journalists, and tweeting the same message to millions?

You answered your own question.

It's the same difference as that room of 2,500 including journalists, and private comments at home after dinner.

We don't expect those private comments to be audited by the SEC, and we shouldn't expect tweets to be either.

I understand that lots of people *want* them to be, perhaps even Tesla themselves, but they simply shouldn't be. There is zero positive that will come out of this elevation of nonsense to "official" status, and a whole world of hurt that we've only just begun to understand.

"Official" is a complete straw man. It has nothing to do with whether a statement is official and everything to do with who can hear it. Twitter is public, and that is the only thing that matters. The fact that Twitter is a horrible cesspool of the worst humanity has to offer, actively encouraged by the fundamental nature of the platform and designed to maximize self-destructive behavior, does not change the fact that it is public.

How is a leaf blower a “sustainable energy product”? Just because it’s battery-powered? Wouldn’t a sustainable energy product be a producer of energy using sustainable means (like, perhaps, the solar panel business), rather than a consumer of energy, where the energy may or may not have been produced sustainably? By that assumption, anything that uses energy would be sustainable energy product. This diesel truck is a sustainable energy product, since it’s possible to use biodiesel in it.

I have a simple rule about companies that I invest in. If the CEO is in the news more than a few times a year, say for quarterly reports, then I don't want to own the company.

Let your EPS speak for you. Leave the hype for others. I'm not the type of investor who likes to subsidize customer purchases.

Is Tesla actually profitable yet? The answer is NOPE. The company has been loosing money all these years.

Wanna impress me? positive EPS, that impresses me and looks like at least 10 yrs will be needed to make up for all the years with losses.

There are a lot of extremely successful companies that you apparently wouldn't have invested in before they made a profit. Apple computer and Facebook come to mind immediately. Hmm, Disney under Walt Disney.

Sometimes a public CEO can help the brand.

(Just don't give him unfettered access to Twitter, which does not help the brand).

What is the difference between a CEO making a comment in front of a live audience of 2,500,with many journalists, and tweeting the same message to millions?

You answered your own question.

It's the same difference as that room of 2,500 including journalists, and private comments at home after dinner.

We don't expect those private comments to be audited by the SEC, and we shouldn't expect tweets to be either.

I understand that lots of people *want* them to be, perhaps even Tesla themselves, but they simply shouldn't be. There is zero positive that will come out of this elevation of nonsense to "official" status, and a whole world of hurt that we've only just begun to understand.

"Official" is a complete straw man. It has nothing to do with whether a statement is official and everything to do with who can hear it. Twitter is public, and that is the only thing that matters. The fact that Twitter is a horrible cesspool of the worst humanity has to offer, actively encouraged by the fundamental nature of the platform and designed to maximize self-destructive behavior, does not change the fact that it is public.

OK let's break that down. Let's imagine that the standard is "who can hear it" (it's not, by the way).

At every point in history prior to "social media" when one person was speaking to a group the intention and whether it's "public" or not was clear. Let's run some examples:

1. People bought tickets to a stadium, or simply turned up at the appointed time, and the person spoke. Intent is clear. Obviously those statements are "public".

2. Person is interviewed on television. It's understood that this conversation is being broadcast, and if someone misspeaks or a question is misheard there is (usually) ample opportunity to clarify. Same same for radio.

3. Person speaks to senior staff in a closed meeting. Clearly not public. No-one expects to be able to repeat the contents of the meeting without severe sanction.

Etc. etc. etc.

Twitter (and social media in general) is completely different. Unlike a stadium there's no appointed time when comments being made are "public" and other comments might not be. Unlike a television broadcast there's no wrapper of a "program" so we know whether the comments are being made on company economics, personal preferences, or just a comedy bit. Unlike a private or limited communication there's active encouragement of "retweeting" with complete removal from any context.

It's fundamentally different from any form of communication to this point in history.

An analogy might be someone saying something at a 100,000 person stadium event through a faulty microphone (so we only hear half the words they say) immediately followed by every one of those 100,000 people making comments about it to their friends, with the person responding to what they perceive someone in the 50th row just said (but that they probably misheard due to all the noise).

Why would ANYONE think that anything "communicated" in such a manner comprises anything that could be categorized as a "public statement"?

It might be public. But it bears no resemblance to any former definition of the word "statement".

And I'm arguing here that it should be treated differently.

How is twitter any different from a press release? Those go out over specific text channels, only some people receive them, they go out at random times, etc.

Basically, your point is nonsensical. Twitter isn’t like a stadium where the PA system is broken. What’s hard to understand about a statement on twitter? If the word limit is not enough, then incorporate a link in the tweet.

It's not that they are official statements, it's that any statements made by a CEO of a company about that company, especially with specific/approximate numbers, can and does affect the market and thus the SEC has a legitimate interest in ensuring that his statements are in line with the legalities of what is allowed.

"Twitter is not now and will never be a source for official information about anything" is not enough, if he keeps spouting stuff about Tesla, investors will take it as still real information and buy/sell accordingly.

But that's not even remotely true. There are more contexts where "statements made by the CEO of a company about that company" are legally "not official" than there are when they are legally official. Any private context, for example. Any "company internal" contexts.

Twitter should be another example of a context that is simply not official.

I understand that I'm an old man shouting at a cloud here, but can no-one else see the harm of elevating Twitter -- or any equivalent "all my private thoughts are public" service -- in this way?

There’s really no such thing as “official”, under securities laws. At least not the way you’re using it. I suggest you stop just spouting nonsense that you clearly have no clue about.

Just to be clear about this, the way the securities regulations work is that investors would be able to rely on statements made by Musk on twitter, regardless of whether Musk’s feed had been designated an approved communication channel by the company. However, without that designation, the company would be required to repost any tweets containing material information to its website (or file them as an 8-K), as per Reg FD.

In other words, that designation doesn’t make his tweets any more “official”. It just saves the company from having to double-post the material ones somewhere else where investors would know to look.

EDIT: Added that it’s only the material tweets that are in question.

EDIT2: For those unfamiliar with Reg FD, it is the SEC regulation that governs selective disclosure. A public company is not allowed to disclose material information to some sub-set of the public. An example of where this might come into play is if a company CEO is at an industry conference where he gives a presentation or participates in a panel discussion. If during that presentation/panel, he discloses any previously undisclosed material information about the company, then the company would be required to post that same information to its website or file it as an 8-K with the SEC -- so that all investors would have access to it. Preferably, that filling would occur first (if the CEO had planned to make the information public). If the disclosure was inadvertent, then the requirement is something like ASAP but no later than the next business day. But there is no point where that information would be considered "not official" or where investors would not have a right to rely on its accuracy. That's the same thing that would happen if a CEO tweeted out some material information at a time when his twitter feed was not designated as a channel for corporate communications -- the information would still be "official", but the company would be on the hook to make sure it were made available to all investors, such as on it's website or as an 8-K.

Oh the irony.. After Q1 results it is painfully obvious the 500k target was bogus and he knew already sales are going down, likely to be around 300k.No point in hitting a man when he's already down. Even if he's too proud to admit it.

It's not that they are official statements, it's that any statements made by a CEO of a company about that company, especially with specific/approximate numbers, can and does affect the market and thus the SEC has a legitimate interest in ensuring that his statements are in line with the legalities of what is allowed.

"Twitter is not now and will never be a source for official information about anything" is not enough, if he keeps spouting stuff about Tesla, investors will take it as still real information and buy/sell accordingly.

But that's not even remotely true. There are more contexts where "statements made by the CEO of a company about that company" are legally "not official" than there are when they are legally official. Any private context, for example. Any "company internal" contexts.

Twitter should be another example of a context that is simply not official.

I understand that I'm an old man shouting at a cloud here, but can no-one else see the harm of elevating Twitter -- or any equivalent "all my private thoughts are public" service -- in this way?

I have a generally dim view of the Twitter-verse, but from an investment standpoint, it's just another communication medium. Musk tweeting stock-moving information over Twitter isn't any different than him sending out an email blast with the same info.

The worst possible thing for Musk is if he believes he has won. I am sure that a lot of effort has been put into explaining to him the risks of carrying on as he has been, because sooner or later he will do something that has serious consequences for himself and others. Whether he has the necessary self-control is of course another matter, but 'I did it because I was drunk/using/mad' is rarely going to work as a defence. That is especially true here, because we can be sure that he has been required to confirm that he understands what is being required of him.

Elon has always operated under the assumption that as a rich white man his lawyers can get him out of anything (stock manipulation, libel, and his attempt to swat Martin Tripp by having someone call in a fake tip that he was armed and dangerous). He is now proven correct. Billionaires need not worry about petty crap like laws.

While I agree that his being wealthy massively contributes to bad behavior and getting away with it, what use is bringing up race in this? Do you really think, say, Tiger Woods wouldn't also be getting away with these things if he were in this situation?

Good, so when the fat faced twat tweets something he should have got cleared first, the SEC can expect swift action and hefty punishment for, at minimum, contempt and possibly other charges, lone musk is a thick lieing manipulator, would be nice to see the chubby twat sharing a cell with someone nasty for a few months, it might remind him what life is like in the real world instead of the make believe one he has created around himself, its always a problem when fools believe their own and others bullshit about themselves...

So in other words a completely toothless punishment that Musk will completely ignore. Had Musk been any other CEO he would be heading towards having his ability to helm publicly traded companies restricted from the initial tweets that started all this.

They are usually pretty lenient unless you are intentionally scamming people, which used to be a huge problem. Being overzealous in trying to connect with customers and hype the product is not really what they usually go for.

Given how non-binding the first punishment was, they were probably surprised they even had to get to this point.

I've actually enjoyed this tit for tat between Musk and the SEC. Working out these limits with all that's involved is very important. Precedent setting. I've pondered how Edison might have fared in this environment as Edison was quite the self-promoter himself -- might say he had his own Reality Distortion Field.. along with the genius. So, maybe we've seen over the last year what that might have been like

How is it really precedent setting though? Do you really think Musk is the first person that the SEC has gone after for making fraudulent material statements?

Of course not.

But it's hard to take them seriously when they ignore far more blatant stock manipulation from short sellers.

Short sellers are a dime a dozen, given their paltry budget it's hard for them to shut all these guys down. They have to focus their efforts where it will have the most impact and set an example. This is why you see s small number of high profile SEC actions. You want them to go after everyone? Fund them.

Elon is right about scammy short sellers, but his obsession with it is wildly unreasonable.